UNIVERSITY  OF 
ILLINOIS  LIBRARY 
URBANA-CHAMPAIGr 
BOOKSTACKS 


vriATiat ! iiowu;- 
.-)IAnw!“.H0-AyiA8!rlU  TA 
«i:>^OATaH^)08 


THE 


PENNSYLVANIA 


B 


ADDRESS 

OP  THE 

COMMITTEE  OF  SEVEN 


THE  CITIZENS  OF  PHILADELPHIA, 


AND  OF  PENNSYI. VANIA, 


APPOINTED  AT  A TOWN  MEETING,  HELD  AT  PHILA- 
DELPHL\,  ON  THE  2Sth  OF  APRIL,  1846. 


JESPER  HARDING,  PRINTER. 


1846 


Digitized  by  the  Internet  Archive 
in  2016 


https://archive.org/details/liabilityofmembeOOjoyj 


3 


made  with  the  Chicago  & Iowa  and  the  Michigan 
Central  Companies ; that  the  rate  of  interest  on  the 
2 bonds  was  eight  per  cent.  These  are  the  statements  o^ 
^ the  circular. 

^ The  most  important  object  to  be  accomplished  by 
jjthe  C.  B.  & Q.  Company,  and  which  induced  it  to  con- 
jnect  itself,  by  traffic  arrangements  and  other  contracts, 
(3  with  Chicago  and  Iowa,  and  with  the  C.  D.  & M.  are  set 
out  in  the  various  contracts,  but  are  not  fully  set  forth 
in  the  circular.  There  had  been  friendly  relations  be- 
tween the  C.  B.  & Q.  R.  B.  Company,  and  the  Illinois 
Central  Company,  and  the  business  of  the  main  line  of 
that  Company  largely  passed  over  the  C.  B.  & Q.  from 
Mendota  into  Chicago  and  vice  versa.  All  its  travel 
from  Dubuque,  and  from  its  line  west  of  Freeport,  and 
from  all  the  Northern  Iowa,  was  passing  between  Free- 
port and  Chicago  over  the  Chicago  & Northwestern 
Road.  This  travel  was  very  large,  and  the  business 
was  very  valuable. 

Could  the  Chicago  & Iowa  Road,  which  had  been 
planned  to  strike  the  river  and  cross  it  at  Bellevue, 
twenty  miles  below  Dubuque,  be  diverted  from  that 
plan  and  strike  the  Iliinois  Central  at  Forreston,  this 
latter  Company  would  send  all  that  travel,  as  well  as 
all  its  freight,  over  the  Chicago  & Iowa  Road,  and 
over  the  C.  B.  & Q.  Road,  between  Aurora  and  Chi- 
cago. The  great  motive  of  the  C.  B.  & Q.,  and  its 
Board  was  to  secure  this  result.  By  the  arrangements 
and  ^agreements  made,  this  result  has  been  secured. 
One-half  of  the  capital  stock  of  the  Chicago  & Iowa 
Road,  also  amounting  to  $630, oOO,  was  secured  to  the' 
C.  B.  & Q.  Company.  Another  important  purpose 
was  to  secure  the  travel  and  business  of  the  C.,  D.  & 
M.  Road  itself  over  the  C.,  B,  & Q.,  though  this  was 


p 


46R2S 


o 

> 


4 


of  miicli  less  value  than  that  of  the  Illinois  Central 
Road. 

The  whole  plan  has  not  been  carried  out,  and, 
therefore,  all  the  fruits  of  it  have  not  as  yet  been  se- 
cured to  the  C.  B.  & Q.,  and  yet,  perhaps,  it  is  well  to 
ascertain  what  has  been  saved  and  secured,  that  the 
moving  cause  of  the  action  all  through  may  be  under- 
stood. The  whole  passenger  business  of  Northwestern 
Illinois  and  of  Northern  Iowa,  commanded  by  the  Illi- 
nois Central  Company,  has  been  taken  from  the  North- 
western, and  that  and  its  freight  business  has  been 
turned  over  Chicago  and  Iowa  and  C.  B.  & Q.  into 
Chicago.  The  bonds  resting  upon  the  Chicago  & Iowa 
are  about  $1,700,000,  and  the  stock  is  about  $1,300,000, 
both  amounting  to  $3,000,000.  The  earnings  of  the 
road  for  its  eighty  miles  about  were  last  year  $544,- 
703.55  ; the  operating  expenses  were  $300,307.53,  leav- 
ing net  $244,396.02  ; interest  on  bonds  during  the  year, 
$140,000,  leaving  net  above  interest  $104,396.02,  which 
is  eight  per  cent,  upon  the  whole  capital  stock.  The 
stock  of  that  Road  is,  therefore,  worth  par,  and  the 
C.,  B.  & Q.  has  of  that  stock,  obtained  by  these 
arrangements,  $630,000. 

The  business,  therefore,  obtained  by  these  agree- 
ments, creates  a value  of  $3,000,000  for  a road  of  eighty 
miles  long.  All  that  business  passes  over  the  C.,  B. 
& Q.  between  Chicago  and  Aurora,  not  quite  forty 
miles,  and  capitalized  on  that  road,  as  it  is,  in  the  Chi- 
cago & Iowa,  the  value  of  that  business  would  be 
$1,500,000  to  the  C.  B.  & Q.  Road,  to  which  add  the 
value  of  the  stock  obtained  in  the  Chicago  & Iowa, 
$630,000,  and  the  net  profit  is  $2,630,000. 

It  is  not  perhaps  necessary  to  show  the  other  an- 
ticipated advantages  to  the  C.,B.  & Q.  from  the  arrange- 


merits,  had  the  ])hin  be  completed,  but  it  is  safe  to  say 
that  they  would  surpass  all  which  it  has  I'ealized  from 
the  success  of  the  ])art  of  the  programme  in  which 
Illinois  Central  and  Chicago  & Iowa  are  interested. 
Had  there  not  been  a mistake  in  tlie  estimated  cost  of 
the  River  Roads,  these  plans  would  liave  now  been  in 
process  of  realization.  These  results  in  part  realized, 
and  in  part  defeated  for  the  present,  were  the  motives 
which  moved  the  Board  to  these  arrangements,  and 
with  the  full  belief  that  the  bonds  of  the  River  Road 
would  be  good,  led  to  their  being  offered  to  the  stock- 
holders of  the  C.,  B.  & Q.,  and  to  the  taking  of  them 
so  largely  by  the  members  of  the  Board  themselves, 
who  indeed  were  individually  takers  of  much  larger 
amounts  than  any  other  stockholders. 

Thus  far,  the  statement  of  facts,  and  motives  of  the 
Board  show  the  most  perfect  good  faith  of  the  gentle- 
men composing  it — show  what  the  books  call  uberrima 
fides.  No  possible  case  could  be  stated  showing  such 
faith  sustained  by  actual  investments  in  the  bonds 
offered  to  stockholders. 

There  is  another  element  in  the  case,  however,  and 
it  remains  to  ascertain  the  effect  of  that  element  upon 
the  question.  There  had  been  formed  at  Dubuque 
after  as  large  subscription  to  stock  had  been  made  as 
it  was  possible  to  obtain,  a Construction  Company 
under  the  Laws  of  Iowa,  with  a capital  of  $300,000 
actually  subscribed,  for  the  purpose  of  taking  the 
contract  to  build  the  road  and  receive  the  bonds  and 
the  unsubscribed  stock  of  the  Railroad  Company,  and 
enter  into  a contract  for  its  construction,  and  such 
a contract  had  been  made.  The  hope  doubtless, 
and  the  expectation  of  making  a profit  induced  men 
to  take  stock  in  a Construction  Company,  who 


6 


would  not  subscribe  stock  in  the  Railroad  Com- 
pany where  they  would  pay  par  for  stock,  and 
the  chance  for  piotit  was  less.  The  $300,000  capital 
in  the  Construction  Company  was  raised  and  the 
work  of  construction  was  in  progress  when  the  plans 
and  their  effects  upon  the  C.,  B.  & Q.  and  its  stock- 
holders were  brought  to  the  notice  of  the  Board,  and 
after  discussions  and  negotiations  for  some  months 
between  all  the  Railway  Companies  interested,  it  re- 
sulted in  the  agreements  above  alluded  to  which  came 
before  the  C.,  B.  & Q.  Board  for  action  in  June,  1871, 
one  of  the  results  of  which  was  the  circular  above 
alluded  to.  In  the  meantime,  after  all  the  agreements 
had  been  completed  and  while  the  boards  of  the 
various  Companies  were  considering  them,  that  of  the 
C.,  B.  & Q.  being  the  last  to  do  so,  the  insecurity  of  a 
traffic  contract  to  control  traffic  without  the  control  of 
the  stock  of  the  road  was  discussed  among  the  mem- 
bers of  the  C.,  B.  & Q.  Board.  In  Michigan  the  Michi- 
gan Central  had  then  recently  lost  all  the  benefits  of 
the  Kalamazoo  & Grand  Rapids  Road,  which  it  had 
aided  by  traffic  contract  simply  because  neither  it  nor 
its  friends  controlled  the  stock.  It  passed  into  the  con- 
trol of  the  Lake  Shore  & Michigan  Southern,  and  all  its 
business  was  commanded  against  the  Central.  The  traf- 
fic contract  was  violated  and  became  useless.  It  had  be- 
come therefore  a resolution  with  us  to  make  no  contract 
agreement,  where  in  some  way  we  did  not  control  the 
stock  of  the  Company  with  which  such  a contract  was 
made.  Indeed  it  seemed  much  like  a farce  to  give  a 
credit  to  bonds  by  a traffic  contract  which  provided  a 
fund  to  buy  them,  when  the  road  might  pass  into  the 
hands  of  a rival  Company  at  an}^  time  and  the  fund  be 
destroyed  because  all  the  business  might  be  sent  over 
another  road  than  ours,  even  after  we  had  given  its 


7 


bonds  credit  and  sold  them.  This  would  be  using  a 
traffic  contract  to  obtain  money  ot  stockholders, 
when  the  whole  value  ot  such  a contract  to 
them  might  be  destroyed  any  hour,  by  the  purchase 
of  stock  by,  or  by  a lease  of  the  road  to  any  rival 
Company.  They  intended  to  invest  largely  in  the 
bonds  of  the  C.,  D.  & M.  Road,  and  for  their  own  pro- 
tection as  well  as  that  of  others  who  might  take  them, 
they  deemed  it  necessary  to  control  that  road  beyond 
contingency.  In  these  circumstances  a party  was  made 
up  to  buy  a ma  jority  of  the  stock  of  the  Construction 
Company.  The  party  was  composed  wholly  of  stock- 
holders of  C.,  B.  & Q.,  some  of  whom  were  in  the 
Board,  and  some  of  them  were  outside.  They  bought 
just  a majority  and  no  more,  at  exactly  the  cost  of  it. 
Though  the  great  motive  was  control  of  stock,  yet 
they  belit^ved  that  no  money  would  be  lost.  They 
believed  it  a safe  investment  with  a possibility  of 
profit.  Bad  they  been  very  sanguine  of  this,  and 
that  the  profits  would  be  large,  they  would  have 
bought  more  than  just  the  control,  as  they  might  have 
done  at  the  same  rate. 

The  question  which  arises  upon  this  additional 
fact  is  this : Does  it  change  the  position  of  the  members 
of  the  Board  who  voted  for  the  circular,  and  who, 
at  the  same  time,  had  joined  in  the  purchase  of  the 
stock  of  the  Construction  Company,  so  as  to  make 
them  liable  for  every  bond  taken  by  a stockholder,  and 
every  stockholder,  in  case  they  choose  to  demand  of 
them  the  price  paid  and  offer  to  give  them  the  bonds  ? 
R ow,  certainly,  this  would  be  an  extraordinary 
liability  in  these  circumstances,  and  one  which  it  will 
be  difficult  to  find  any  principle,  and  certainly  no  case 
can  be  found  to  support. 


8 


First — The  proceeds  of  the  sale  of  the  bonds,  both 
those  which  they  themselves  took  and  those  which 
might  be  sold  to  other  parties,  were  to  go  into  a 
railroad,  to  aid  in  its  construction,  in  which  those 
parties  were  interested  as  stockholders,  as  above 
stated,  to  the  extent  with  other  C.,  B.  & Q. 
stockholders,  of  just  a little  more  than  half 
its  stock.  Every  taker  of  bonds  fully  under- 
stood that  their  money  was  to  be  expended  upon 
the  road  and  subject  to  the  contingencies  as  to 
cost — ^miscalculation  of  engineers,  and  other  chances 
which  always  attend  such  enterprises.  The  learned 
counsel  who  gives  an  opinion  to  the  committee,  is  com- 
pelled to  admit  that  there  was  no  misstatement  in  the 
circular,  and  that  the  enterprise  was  fairly  stated 
therein  to  the  stockholders  of  the  C.,  B.  & Q.  Company. 
Upon  general  principles,  therefore,  there  can  be  no 
reason  why  ihose  who  voted  for  that  circular  in  the  C., 
B.  & Q.  Board  should  be  subject  to  any  more  than 
their  fare  share  of  the  risks  as  assumed  by  them  in 
taking  the  bonds. 

There  can  be  no  reason  why  they  should  become 
liable  to  other  parties  for  monies  paid  by  them  for 
bonds,  which  has  been  expended  in  the  exact  manner 
in  which  all  understood  it  was  to  be  expended.  They 
were  not  guarantors — they  did  not  even  recommend  or 
advise  stockholders  to  buy.  They  simply  stated  facts, 
and  said  that  they  were  authorized  to  offer  those  bonds 
to  stockholders.  The  money  went  into  an  enterprise  in 
which  they  had  an  interest  as  stockholders,  but  only  a 
part  interest.  If  the  facts  of  the  case  were  similar  to 
those  of  the  case  cited  by  the  counsel  who  gave  the 
opinion  to  the  Committee,  so  that  the  principle  of  that 
case  could  apply  to  this,  then  possibly  a bill  might  be 


9 


maintained  against  the  Construction  Company  to  can- 
cel tlie  contracts  for  the  sale  of  the  bonds.  Tliere  is, 
however,  no  resemblance  in  the  facts,  nor  consequently 
in  the  principles  involved.  The  case  cited  as  being 
much  in  point,  was  between  two  Corporations.  One 
was  a Telegraph  Company  desiring  to  lay  a cable  along 
the  coast  of  South  America  ; the  other  was  a munufac- 
turer,  and  as  such  accustomed  to  contract  for  building 
lines  of  telegraph.  The  Telegraph  Company  had  an 
engineer  in  its  employment  upon  whose  estimates  and 
Judgment  it  relied  in  making  its  contracts.  The 
Manufacturing  Company,  negotiating  to  build  the 
telegraph  line,  while  negotiating  the  contract  with 
the  Telegraph  Company,  employed  the  engineer  of 
the  latter  Company,  making  a sub-contract  with  him 
to  do  the  work,  and  then  having  interested  the 
party  upon  whose  judgment  the  other  party  relied 
in  entering  into  the  contract  for  them,  closed  the 
contract  with  the  Telegraph  Company.  To  speak 
plainly  about  the  matter,  though  the  Vice  Chancellor 
uses  mild  words  in  his  opinion,  the  Manufacturing 
Company  bought  the  Engineer  of  the  other  party  and 
then  made  a contract  with  it,  knowing  that  it  was 
guided  by  the  statements  of  the  Engineer  whom  they 
had  interested  for  themselves.  There  could  not  be 
much  difficulty  in  setting  aside  a contract  obtained  un- 
der such  circumstances.  But  a simple  statement  of 
the  case  is  enough  to  show  that  there  is  no  analogy  be- 
tween that  and  this  case. 

But  let  us  test  the  case  a little  further.  The  opinion 
of  the  learned  counsel  is  that  the  members  of  the  Board 
of  C.,  B.  & Q.  who  voted  for  the  circular,  and  who,  at 
the  same  time,  had  an  interest  in  the  Construction 
Company,  are  liable  to  be  called  upon  to  refund  the 


10 


money  to  every  bondholder  who  took  the  bonds  in 
consequence  thereof,  though  it  has  not  gone  into  their 
pockets  but  into  a railroad  exactly  as  intended.  If  so, 
then  each  of  them  who  so  voted  is  liable  for  all  the 
bonds  so  sold,  and  he  is  liable  simply  because  he  had 
bought  a share  of  the  stock  in  the  Construction  Com- 
pany, and  did  not  cause  the  act  of  such  purchase  to 
be  stated  in  the  circular.  If  this  be  so,  then  if 
only  one  of  the  members  of  the  C.,  B.  & Q.  Board, 
while  these  negotiations  were  going  on,  had  bought 
a share  in  the  Construction  Company,  and  then  voted 
with  the  other  members  of  the  Board  for  the  circular, 
though  the  vote  was  unanimous,  he  would  become 
liable  for  all  the  bonds  sold  under  it,  if  the  enterprise 
was  unsuccessful.  If  it  was  the  unanimous  opinion  of 
the  whole  Board  that  the  circular  was  expedient,  and 
the  one  who  had  bought  a single  share  of  construction 
stock  agreed  with  them,  why  should  he  vote  against  it, 
and  if  he  agreed  with  them,  why  should  he  be  liable 
for  the  whole  results  of  the  enterprise?  And  if  the 
principle  is  true  upon  which  Mr.  Hoar  rests,  and 
there  was  but  a single  member  of  the  C.,  B.  & Q. 
Board  who  voted,  and  who  had  a single  share  of 
construction  stjck  costing  a $100,  he  would  be- 
come liable  for  every  bond  sold  in  consequence 
of  the  circular,  though  the  money  went  in  good 
faith,  every  dollar  of  it,  to  build  the  road  exactly 
as  all  understood  it  should  go,  and  though  he  might 
be  but  one  stockholder  of  one  share  of  the  Con- 
struction Company,  with  a thousand  others,  and 
though,  like  all  the  other  members  of  the  C.,  B.  & 
Q.  Board,  a company  whose  interests  were  largely 
involved,  he  believed  the  bonds  were  perfectly  good, 
and  evinced  his  faith  by  taking  very  largely  of  them, 
and  though  there  were  abundant  good  reasons  con- 


11 


nected  with  the  C.,  B.  & Q.  Company’s  Road,  to  whose 
stockholders  the  circular  was  addressed,  which  would 
induce  him  to  vote  for  it,  and  which  should  induce 
them  to  subscribe.  It  is  safe  to  say  that  no  principle 
which  leads  to  such  results  can  be  found  either  in  law 
or  equity,  and  that  no  possible  case  can  be  found  which 
by  remote  analogy  even  sustains  any  such  principle. 
The  case  cited  is  the  fartherest  possible  from  doing  it. 
There  is  no  resemblance  or  analogy  between  them. 
The  great  benefits  of  the  arrangements  made,  of  which 
the  traffic  contract  and  circular  are  a part,  have  re- 
sulted to  C.,  B.  & Q.  alone,  in  which  all  its  stock- 
holders are  interested.  If  any  party  should  suffer 
for  an  unfortunate  investment,  it  should  be  the  party 
for  whom  the  members  of  its  boaid  acted,  and  which 
has  been  very  largely  benefitted,  and  not  the  members 
of  the  board  who  are  sufferers  beyond  any  stockhold- 
ers out  of  it. 

Even  had  these  members  of  the  Board  who  voted 
holding  a majority  of  this  construction  stock  held  the 
whole  of  it  in  these  circumstances,  and  had  been  the 
owners  of  the  bonds,  and  they  had  been  offered  under 
this  circular  stating  the  interest  of  the  C.,  B.  & Q.  with 
careful  truth,  and  that  the  money  arising  from  sale  of 
the  bonds  was  to  be  expended  in  the  construction  of 
the  road  under  a mortgage  upon  which  the  bonds  were 
issued,  they  themselves  taking  a large  amount  of  them, 
there  could  be  no  such  liability.  In  such  a case  it  is 
understood  by  all  parties  taking  bonds  that  a road  is 
to  be  built,  that  there  are  chances  and  possibilities  of 
mistakes  in  estimates  of  cost,  and  in  results  as  to  the 
profitableness  of  the  adventure.  All  alike  take  the 
chances  of  this.  In  such  a case,  good  faith  would  re- 
quire that  all  should  pay  alike  for  their  bonds  the 


12 


same  amount  of  money,  and  tliat  the  money  should 
be  expended  as  it  was  understood  it  should  be,  in  the 
construction  of  the  road.  It  is  difficult  to  perceive 
how  the  nicest  sense  of  good  faith  required  more.  The 
case  upon  principle  may  be  illustrated  by  stating  a 
case  : suppose  there  are  ten  men  who  unite  together  to 
build  a railroad,  believing  it  will  be  profitable,  and 
believing  it  will  benefit  other  property  largely  which 
they  own  in  its  neighborhood,  as  well  as  other  similar 
property  owned  by  many  other  people  and  corpora- 
tions, such  for  instance  as  iron  and  copper  mines  which 
are  located  along  a proposed  road.  The  ten  subscribe 
to  the  stock  $200,000  each.  Seven  of  them  are  elected 
directors,  and  they  are  charged  with  the  construction 
of  the  road.  They  believe  that  the  stock  will  be  very 
valuable.  They  put  a mortgage  upon  the  property  of 
$6,000,000.  The  other  three  are  charged  by  resolution 
of  the  Board  with  the  sale  of,  and  offer,  the  bonds  to 
all  parties  who  are  interested  in  the  property  to  be 
benefited  by  the  construction  of  the  road ; they  state 
the  common  interest  in  its  construction,  that  a large 
amount  of  stock,  $2,000,000,  is  subscribed,  and  offer 
the  bonds,  stating  at  the  same  time  the  parties  in  inter- 
est reserve  and  shall  take  three  millions  themselves  of 
the  bonds,  but  they  do  not  state  that  they  own 
$600,000  of  the  stock  which  they  shall  pay  in  in  cash, 
nor  are  they  asked  if  they  have  taken  stock.  They 
offer  the  bonds  to  the  members  of  corporations  whose 
property  will  be  largely  benefitted,  and  in  whicn  they 
themselves  are  directors.  The  bonds  are  taken  by 
such  parties,  except  the  $3,000,000  reserved  for  the 
stockholders  of  the  railroad  company.  The  work  goes 
on,  they  pay  for  all  the  stock  subscribed  by  them,  and 
for  all  the  bonds,  as  do  all  others.  It  is  found,  how- 
ever, that  all  the  means  will  not  finish  the  road,  and 


13 


the  road  so  far  as  finished  will  not  pay  the  interest  on 
the  bonds  issued. 

Now,  what  is  the  position  of  the  parties.  Have  all 
those,  other  than  the  seven  men  Directors,  when  the 
enterprise  has  become  disastrous,  a right  to  turn  round 
upon  the  three,  and  say,  “You  had  a very  large  inter- 
est in  the  stock  of  this  company,  which  we  did  not 
have  ; indeed,  you  put  $600,000  of  money  into  the 
stock,  and  did  not  tell  us  you  had,  done  so^  and  though 
you  took  $900,000  of  the  bonds  also,  and  paid  just  the 
same  for  them  as  we  did,  yet  the  thing  has  resulted 
badly,  and  you  must  take  the  bonds  which  we  took, 
and  pay  us  back  our  money,  principal  and  interest.” 
Can  this  be  law  or  equity,  or  would  it  be  common  fair- 
ness between  men  and  men,  and  yet  that  is  the  princi- 
ple set  up  by  the  opinion  published  by  the  late  Attor- 
ney General.  Says  that  learned  gentleman:  “He 

who  recommends  and  professes  to  join  with  another  in 
a purchase  cannot,  1 think,  have  an  undisclosed  inter- 
est as  the  seller,  without  becoming  liable  to  the  conse- 
quences, if  his  associates,  after  the  purchase  has  proved 
unfortunate,  discover  that  the  adverse  interest  existed, 
and  elects  to  rescind  the  bargain.”  This  is  the  pith  of 
his  opinion.  Is  such  an  undisclosed  interest  an  ad- 
verse interest?  Does  it  tend  to  prejudice  the  pur- 
chasers of  the  bonds  ? Does  it  not,  in  fact,  show  the 
utmost  confidence  in  the  investment,  and  the  most  per- 
fect good  faith  in  selling  the  bonds  % If  the  interest 
had  been  disclosed,  would  it  not  have  strengthened  the 
bonds  immensely  in  the  estimation  of  the  taker  ? 

But  there  can  be  no  principle  upon  which  any  party 
can  be  called  to  suffer  in  behalf  of  a joint  investor  with 
themselves,  where  it  is  understood  that  the  proceeds  of 
the  investment  are  to  go  into  a public  work,  upon  the 
success  of  which  depends  the  value  of  the  common 


14 


investment,  according  to  the  understanding  of  all 
parties.  In  all  such  cases  the  question  is  always 
one  of  bona  tides,  for  there  certainly  is  no  principle 
which  prohibits  a board  from  placing  before  stock- 
holders any  plan  which  may  be  for  the  supposed 
benefit  of  their  property,  and  leaving  it  for  them  to 
consider  it.  This  has  been  many  times  done  by  the  C., 
B.  & Q.  Board,  and  very  greatly  to  the  benefit  of  its 
stockholders.  It  is  a common  transaction.  The  ques- 
tion always  is,  and  must  be,  has  there  been  bad  faith, 
which  would  be  equivalent  to  wrong  doing,  in  other 
words,  a fraud  ? Now,  in  this  instance,  the  marks  of 
good  faith — of  confidence  in  the  value  of  the  securities 
offered  under  the  circular,  so  abound  in  the  acts  of  the 
members  of  that  Board,  that  none  can  be  so  blind  as 
not  to  see  it.  They  took  much  larger  amounts  of  them 
than  anybody  else  upon  the  same  basis  and  paid  for 
them  at  exactly  the  same  rate.  They  were  so  confident 
that  they  even  invested  in  stock  which  must  become 
utterly  worthless  before  the  bonds  should  suffer,  and 
which  might  become  worthless  when  the  bonds  were 
good  even.  This  presents  proof  even  of  exuberant 
confidence  in  the  value  of  what  they  offered  to  stock- 
holders, but  which,  even  with  this  confidence,  they  did 
not  venture  to  recommend,  but  simply  to  offer. 

Had  all  this  been  stated  with  the  explanations 
which  should  have  accompanied  the  statements,  the 
result  could  only  have  been  to  increase  the  confidence 
in  every  stockholders  mind  in  the  value  of  the  bonds 
offered  them,  and  many  more  would  have  been  asked 
for.  It  was  not  possible  in  the  short  limits  of  a circu- 
lar to  have  stated  all  these  arrangements  between  the 
several  railroad  companies,  the  objects  to  be  gained, 
the  importance  to  C.,  B.  &Q.  and  all  the  motives  which 
guided  each  member  of  the  Board  in  obtaining  control 


ir> 

of  the  construction  stock.  The  simple  facts,  therefore, 
connected  with  the  River  Roads,  and  the  object  to  be 
accomplished,  were  put  into  the  smallest  possible 
space,  enough  to  show  what  it  was  understood  the 
property  was,  and  to  enable  stockholders  to  judge  for 
themselves  as  fully  as  possible,  which  was  all  which 
it  was  deemed  necessary. 

On  the  whole  review  of  the  case,  and  with  all  the 
light  of  Judge  Hoar’s  opinion,  which  has  been  fully 
considered,  I conclude  that  there  is  no  possible  aspect 
of  the  case  in  which  you  and  others  can  be  made 
liable  for  your  act  as  one  of  the  C.,  B.  & Q.  Board  for 
voting  for  the  circular  of  June,  1871. 

Yours  Truly, 


J.  F.  JOY. 


